Litigation

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    PA Court Case May Create Loophole for Landowners to Bust Old Leases

    According to expert analysis by the legal beagles at the Blank Rome law firm, a recent decision by the Superior Court of Pennsylvania disregards established precedent law and has created a new law in PA, possibly “leaving lessees [drillers] in limbo, possibly giving unscrupulous lessors [landowners] a unilateral tool to terminate oil and gas leases, and ultimately harming both lessors and lessees in the process.” In Montgomery v. R. Oil & Gas Enterprises, two (out of three) judges ruled that oil and gas leases could be severed (terminated) both “vertically” and “horizontally” by unilateral actions of the landowner. In this case “vertical” means shale or other rock layers under the ground, and “horizontal” means surface ownership. As with most things legal, this is a complicated case with a lot of history we won’t attempt to recount it chapter and verse. If we can boil it all down, the judges found that a landowner who had purchased a piece of property with an old lease that contained terms for shallow rock layers and deeper rock layers, could, unilaterally, terminate one aspect of that lease (in this case the shallow layer portion of the lease) while keeping the other aspect of the lease intact (the deeper layers, already drilled and producing). The Blank Rome analysis below does a deep dive into the case, frankly ripping the decision to shreds, and postulates the theory that it may lead to cases in which a landowner with a decades-old lease in which the shallow layers are held by production can separate and convey the deeper layers to a family member or family trust, and then terminate the deeper layer lease, re-releasing it to a different driller…
    Read More “PA Court Case May Create Loophole for Landowners to Bust Old Leases”

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    PA AG Criminal Lawsuit Against XTO Energy Dismissed After 4 Yrs

    Four years after then-Pennsylvania Attorney General Kathleen Kane decided to turn an accident into a criminal prosecution against XTO Energy, the final chapter has been written. Anti-drilling Kane attempted to criminalize the accidental spill of a small amount of recycled wastewater by XTO that happened years before she took office (see PA AG Abuses Her Authority, Files Criminal Charges Against XTO). There was an accidental spill of ~50,000 gallons of frack wastewater at an XTO drill site in 2010 in Lycoming County, PA. XTO remediated the site, digging up affected soil, and paid out a $100,000 settlement in 2013. By the time Kane took office, the matter had been over and done for over two years. But Kane wanted/needed a quick way to make a splash with her hardcore left fringe supporters (payback time for money and volunteers), so she re-opened the case and fantastically filed criminal charges saying XTO showed a pattern of brazen disregard for safety, blah blah blah. In 2013, XTO filed to dismiss the Kane lawsuit (see XTO Energy Files to Have AG Kane’s Lawsuit Dismissed). The federal EPA also got into the act and last year XTO settled a violation of the Clean Streams Law and Solid Waste Management Act. Pricetag? Another $300,000. Now that the company has paid out the nose ($400,000 total), U.S. Middle District Judge Matthew Brann yesterday approved a motion filed by the U.S. attorney’s office to end the case. Finally. After four years…
    Read More “PA AG Criminal Lawsuit Against XTO Energy Dismissed After 4 Yrs”

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    OH, WV Landowners Sue Antero re Post-Production Royalty Deductions

    Lawsuits filed against Antero Resources in both Ohio and West Virginia seek class action status. Both lawsuits make similar claims: Namely that Antero has improperly deducted post-production expenses from royalty checks (not allowed under lease terms), and that Antero has avoided, with creative accounting, paying royalties on natural gas liquids (NGLs) produced. The OH lawsuit was first filed in January of this year, followed by a lawsuit filed in WV in May. We have copies of both complaints below, so you can read the language for yourself. In the case of the OH lawsuit, Antero filed a motion to dismiss. The landowners amended the complaint and Antero dropped their motion to dismiss. The OH lawsuit, and as near as we can tell, the WV lawsuit, are both moving forward. Here’s our summary of both lawsuits–the MDN Cliffs Notes version…
    Read More “OH, WV Landowners Sue Antero re Post-Production Royalty Deductions”

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    Lawyers ask US Supreme Court to Hear WV EQT Royalty Case

    WV Supreme Court Justice Beth Walker

    In a decision that thrilled drillers, but angered landowners, the West Virginia Supreme Court decided in May to overturn its own previous decision (from last December) and allow driller EQT to deduct post-production expenses from royalty payments (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). Last December MDN reported on the huge WV Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). Those who won the case say newly elected Supreme Court Justice Elizabeth Walker had conflicts of interest and should not have been allowed to vote to rehear the case in the first place (which she did). On that basis, they tried to avoid the rehearing altogether, but that failed. As it turns out, the lawyers mainly argued over the meaning of three short words: “at the wellhead” (see WV Supreme Court Post-Production Royalty Case Hinges on 3 Words). In the May decision, the justices reversed their earlier decision, voting 4-1 in favor of allowing EQT to deduct “reasonable” post-production expenses. Newly elected Justice Beth Walker, with (according to the other side) conflicts of interest, voted in favor of EQT. On the basis that Walker should not have been part of the process at all, lawyers for the losing landowners have appealed the case all the way to the United States Supreme Court…
    Read More “Lawyers ask US Supreme Court to Hear WV EQT Royalty Case”

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    NY Court Tells Exxon to Turn Over Records to Corrupt AG

    Bruce Plante Cartoon

    New York’s highest court, the Court of Appeals, has just ruled that the New York State Attorney General, Eric Schneiderman, has the right to demand documents in a court case that accuses Exxon of hiding internal research that shows burning oil and gas leads to catastrophic, man-made global warming. Schiederman has been on a witch hunt for more than year. Schneiderman himself is accused of secretly (illegally) colluding with Big Green groups in targeting Exxon. Schneiderman has been subpoenaed and told to turn over emails and other records, and he has refused to do so (see NY AG, Others Served Congressional Subpoena re Exxon Witch Hunt). Yet Schneiderman demands Exxon turn over records for his fishing expedition. The man is a menace–and a putz. Unfortunately New York’s high court appears to be corrupt too–witness their decision to uphold local frack bans (see Shale Drilling in NY is Over – High Court Upholds Town Bans). Now the high court says Exxon must comply (like a Borg drone) with Schneiderman’s request. Our advice to Exxon: Pull a Hillary and say the emails got deleted from a private server. Hey, it worked for her!…
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    Trouble for Mountain Valley Pipe: WV DEP Withdraws Water Permit

    In March, the West Virginia Dept. of Environmental Protection (WVDEP) issued a federal water crossing permit for the Mountain Valley Pipeline (MVP)–a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA (see WV DEP Grants Mountain Valley Pipeline Water Crossing Permit). In June, a group of profoundly radical “environmental” organizations (Sierra Club, West Virginia Rivers Coalition, Indian Creek Watershed Association, Appalachian Voices and Chesapeake Climate Action Network) filed a lawsuit in the U.S. Court of Appeals for the Fourth Circuit against the WVDEP for doing their job issuing the permit (see Radicals File Lawsuit Against WV DEP for Approving MV Pipeline). Because of the pressure of that lawsuit, last week the WVDEP caved and reversed their decision, rescinding (called “vacating”) the permit for MVP. The WVDEP says they will now “re-evaluate the complete application to determine whether the state’s certification is in compliance with Section 401 of the federal Clean Water Act.” Another victory for the forces of evil…
    Read More “Trouble for Mountain Valley Pipe: WV DEP Withdraws Water Permit”

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    WV Surface Owners Win Important Case Against EQT re Drill Pad

    A West Virginia Circuit Court case decided last week (by jury) found in favor of surface owners against a well pad constructed by EQT. The decision has far-reaching implications for not only surface owners and drillers, but mineral rights owners too. From the first time we read about so-called “joint development” legislation being promoted by the drilling industry in WV (back in February), we’ve not been fans (see More on WV’s Push for “Joint Development” Instead of Forced Pooling). In brief, there are a number of existing old leases in WV, signed before shale drilling began, that prevents drillers from drilling a horizontal well across an individual property boundary line–until a new lease is signed. Joint development says if the driller already owns the leases on all adjoining properties they want to combine into a drilling unit, they can do so without signing a new lease. The proposed joint development law seemed to us to be a way for drillers to avoid negotiating and paying more for new leases–which they should be willing to do! However, the case of Crowder and Wentz v EQT puts joint development in a new light for us. The case appears (to us) to be an abuse of power by surface owners against both drillers and mineral rights owners–by using the current prohibition against joint development. We certainly understand why surface rights owners would resist having a drill pad on their property, however, that’s life. They bought land (or inherited it, etc.) that doesn’t have mineral rights attached. Under existing WV law, a well pad can be drilled, taking 10-15 acres of the surface land (against the surface landowner’s wishes, but with compensation), in order to access the minerals under that specific piece of property. However, the court ruled last week in Crowder and Wentz v EQT that a driller cannot then use that same already-constructed well pad to further drill wells that access minerals under other, adjacent properties. Which in our book makes a strong case for a joint development law, to avoid this kind of misuse by surface landowners…
    Read More “WV Surface Owners Win Important Case Against EQT re Drill Pad”

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    VA, WV Landowners Sue FERC re Pipelines, Seek to Gut Natural Gas Act

    A group of 57 gentry landowners in Virginia and West Virginia, backed by an out-of-state Big Green group, have just sued the Federal Energy Regulatory Commission (FERC) in an attempt to gut the 80-year old Natural Gas Act that gives FERC the right to grant eminent domain for pipeline projects. Specifically, the colluding landowners oppose Dominion’s $5 billion, 594-mile natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina, and EQT’s $3.5 billion Mountain Valley Pipeline project, a 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The frivolous lawsuit filed yesterday in the U.S. District Court for the District of Columbia (full copy below) claims the landowners’ property is a “taking” not properly compensated under the U.S. Constitution–even though landowners are paid and they can continue to use their land as they see fit, as long as they don’t put a building overtop the pipeline. Here’s the latest on Big Green’s effort to oppose every square inch of new natural gas pipelines anywhere, including in the Marcellus/Utica…
    Read More “VA, WV Landowners Sue FERC re Pipelines, Seek to Gut Natural Gas Act”

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    Not Lights Out for Constitution Pipe Just Yet – Rehearing Request

    In August MDN brought you the sad news that the U.S. Court of Appeals for the Second Circuit has ruled against the Constitution Pipeline and their lawsuit against the Cuomo-corrupted New York Dept. of Environmental Conservation (see Court Rejects Constitution Pipe’s Case Against NY DEC; Now What?). To boil it down to its essence, the court said the DEC had the right to reject issuing stream crossing permits for the critically-needed pipeline, even though it would shut down the project. The legal upshot is that individual states have the right to stop a federally-approved project. Which appears to upset the legal principle that federal law trumps state law, and state law trumps local law. It’s always been that way. Until now. Given the Second Circuit’s ruling, some energy attorneys were whispering it’s likely “lights out” for the Constitution (see Energy Attorneys Hint it’s ‘Lights Out’ for Constitution Pipeline). However, that pessimism may be premature. Last Friday attorneys for the Constitution filed a request with the Second Circuit for a rehearing of the case–this time before ALL of the active judges sitting on the Second Circuit bench–something called an en banc hearing. Their reasoning? If the original decision stands, it will overturn decades of established legal principle and (our words) neuter FERC’s ability to approve pipeline projects…
    Read More “Not Lights Out for Constitution Pipe Just Yet – Rehearing Request”

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    Corrupt NY DEC Denies Water Permit for 7.8 Mile Power Plant Pipeline

    Environmental radicalism has now fully metastasized at the New York Dept. of Environmental Conservation (DEC). The organization is nothing more than a political tool of the environmental far-left (and corrupt Gov. Cuomo), as evidenced in the DEC’s latest outrageous decision to deny federal water crossing permits to a 7.8 mile pipeline to feed an electric power generating plant in Orange County, NY–a plant currently under construction. The reason for the rejection? NOT because of any so-called harms to the environment due to crossing streams–the reason for the permits. No. But because, says the DEC, the Federal Energy Regulatory Commission (FERC), which evaluated the power plant project, didn’t take into consideration the plant’s potential contribution to mythical man-made global warming. In other words, the DEC just admitted they have denied a WATER permit based on other (political) criteria–not the criteria on which they were legally bound to decide. We predict the DEC will get crushed when this is all over and done. But the problem is, it will take years to litigate. Meanwhile, the Competitive Power Ventures (CPV) Valley Energy Center will complete its construction and go online in early 2018–powered by much-dirtier fuel oil instead of clean-burning natural gas. Congratulations to all of the antis, and the DEC, who oppose the power plant project. You’ll now have even MORE so-called global warming (and air pollution in the region) because of your lunacy…
    Read More “Corrupt NY DEC Denies Water Permit for 7.8 Mile Power Plant Pipeline”

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    Did Shell Pull a Fast One on Big Green Groups re Air Permit?

    Earlier this week MDN reported that Shell had settled an action brought by Big Green groups against an air permit issued for their now under construction ethane cracker plant in Beaver County, PA (see Shell Cuts Deal with Big Green Groups re Cracker Plant Air Permit). In 2015, two Big Green groups–the Philadelphia-based Clean Air Council and the Washington, DC-based Environmental Integrity Project (both disgusting litigation factories) filed a complaint against Shell to block the air quality permit needed to build the $6 billion ethane cracker in Monaca (see Big Green Groups File to Block Shell Cracker Air Quality Permit). The filing came after the state Dept. of Environmental Protection (DEP) approved the air permit for the facility. The two Big Green groups filed an appeal with the state Environmental Hearing Board, a special court set up to hear appeals of DEP decisions. The groups believe the DEP “should have required more stringent monitoring requirements for fugitive air emissions from Shell.” Specifically the groups wanted fence line monitoring. So Shell “caved” and agreed. But in reading an account of the agreement, it dawned on us, reading between the lines, that perhaps this is what Shell planned all along! That is, Shell already planned to do fence line monitoring. The settlement Shell signed earlier this week ensures the Big Green groups can’t bring any further actions with regard to the air permit. We don’t know for sure, but it seems to us like maybe Shell was playing a long game of chess, and knew this kind of action would come, and held back the fenceline monitoring piece until the right time to play it–trading the fence line monitoring pawn for inoculation against future Big Green litigation. Smart…
    Read More “Did Shell Pull a Fast One on Big Green Groups re Air Permit?”

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    Range/DEP Lycoming Well Settlement: From $8.9M Fine to $0

    Yesterday MDN brought you the news that Range Resources and the Pennsylvania Dept. of Environmental Protection (DEP) have officially “settled” something we thought was already settled–alleged methane migration from a well Range drilled in 2011 (see Range & PA DEP Settle re Alleged Methane Leak at Lycoming Well). In June 2015, then-Secretary of the DEP, John Quigley, slapped Range with an $8.9 million fine–the largest such fine ever levied by the DEP (see PA DEP Slaps Range with Record $8.9M Fine for Methane Migration). The DEP said a Range well, drilled in 2011 in Lycoming County, PA, leaked methane since at least 2013 via an improperly cemented well casing, and the methane “contaminated the groundwater-fed wells of private water supplies, and a nearby stream.” Range and the landowner where the well is drilled said methane was in groundwater supplies long before Range drilled the well. Range fought the action tooth and nail, appealing the determination and fine to the PA Environmental Hearing Board. In May 2016, the DEP quietly dropped the fine and the case against Range (see PA DEP Drops $8.9M Fine Against Range Res. re Methane Migration). We thought that was THE END. But it wasn’t. On Monday of this week, both Range and the DEP filed paperwork with the Environmental Hearing Board (a special court set up to hear appeals of DEP decisions) requesting the matter now officially be closed and “settled.” We now have a copy of the settlement itself–and it shows the DEP will not extra one penny from Range over what they previously said should cost $8.9 million. Interesting. Antis like THE Delaware Riverkeeper, Maya van Rossum, are “dumbfounded” at the settlement. Below is a copy of the settlement paperwork and select anti reaction to it…
    Read More “Range/DEP Lycoming Well Settlement: From $8.9M Fine to $0”

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    Fayette County, WV Loses Appeal to Block Injection Well

    An effort by Fayette County, WV to ban injection wells in the county has gone down to a final defeat. In January 2016, three liberal Democrat county commissioners from Fayette County, with the backing and help of the radical WV Mountain Party, voted to ban injection wells in the county (see WV County Officially Bans Injection Wells; Children Brainwashed). The ban was intentionally written so broadly it would also ban the operation of more than 500 vertical oil and gas wells in the county. The next day EQT sued to overturn the ban (see EQT Sues WV County that Banned Injection Wells, Seeks Injunction). One of the chief architects of the ban, from the Mountain Party, admits the ban was intended to stop all oil and gas activity in the county (see Anti Admits Fayette County, WV Ban Aims to Shut Down All O&G Wells). Fearing they would lose the EQT lawsuit, in March 2016 the Fayette commissioners backed away from the position of banning everything to do with drilling in the county. They revised the proposed ban regulation as a tactic to avoid losing their court case (see Fayette WV Commissioners Change Ban to Focus on Injection Wells). It didn’t work. In June 2016, a federal judge tossed out Fayette’s illegal ban (see Federal Judge Rules Fayette County Injection Well Ban Illegal). But that didn’t stop the lib Dems who, with the assistance of the radical Appalachian Mountain Advocates, appeal the federal judge’s decision (see Fayette County, WV Appeals Federal Court Ruling on Injection Well). That appealed case went to the 4th U.S. Circuit Court of Appeals, which has just ruled that Fayette County was out of line (copy of the decision below). Counties can’t make up their own oil and gas regulations–that right is reserved to the state…
    Read More “Fayette County, WV Loses Appeal to Block Injection Well”

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    Dela. Riverkeeper Loses 2nd Court Case Against NEPA Pipeline

    Last week MDN brought you the news that THE Delaware Riverkeeper had lost a federal lawsuit against Kinder Morgan’s Orion Project to expand the Tennessee Gas Pipeline in northeast Pennsylvania (see Dela. Riverkeeper Loses Fed. Court Case Against NEPA Pipeline). Riverkeeper argued that both the U.S. Army Corps of Engineers and the PA State Dept. of Environmental Protection (DEP) should not have issued Clean Water Act stream crossing permits for the project. Last week a federal court ruled that the U.S. Army Corps was well within its right to do so. This week the other shoe dropped. The U.S. Court of Appeals for the Third District ruled that the DEP was also within its right to issue a permit. In this case, two strikes and THE Delaware Riverkeeper is out. The project, which received full Federal Energy Regulatory Commission approval in February of this year, remains on track to be built/online in June 2018…
    Read More “Dela. Riverkeeper Loses 2nd Court Case Against NEPA Pipeline”

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    NFG Tells Court Constitution Decision DNA to Northern Access Case

    Yet more drama and intrigue in National Fuel Gas Company’s (NFG) lawsuit against the New York Dept. of Environmental Conservation (DEC). Three years ago NFG proposed and filed to build the Northern Access Pipeline project–a $455 million project includes building 97 miles of new pipeline along a power line corridor from northwestern Pennsylvania up to Erie County, NY. The project also calls for 3 miles of new pipeline further up, in Niagara County, along with a new compressor station in the Town of Pendleton. The Federal Energy Regulatory Commission (FERC) granted final approval for the project in February of this year (see NFG’s Northern Access Pipe in NY/PA Gets FERC Approval). However, in April of this year, the DEC ruled against granting the project stream crossing permits, effectively killing it, at least for now (see Cuomo’s Corrupt NY DEC Blocks NFG Northern Access Pipeline Permit). NFG sued the DEC in the Second Circuit of the U.S. Court of Appeals to overturn their denial (see NFG Sues NY DEC in Fed Court re Northern Access Pipe Rejection). A similar court case was filed by the Constitution Pipeline against the DEC with the 2nd Circuit. The court ruled against the Constitution and for the DEC on August 18 (see Court Rejects Constitution Pipe’s Case Against NY DEC; Now What?). Predictably, the office of NY’s corrupt Attorney General, Eric Schneiderman, filed a letter with the 2nd Circuit (copy below) saying, in essence, the Constitution case is just like this one, so the court should rule the same way: against NFG and for the DEC. However, a few days after that, NFG’s attorneys filed their own letter (copy below) pointing out the fallacy in the previous letter. NFG says the Constitution is very narrow, and in fact ultimately supports the NFG case against the DEC…
    Read More “NFG Tells Court Constitution Decision DNA to Northern Access Case”

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    FERC Fights NJ Town Effort to Decertify Garden State Expansion

    Two New Jersey towns have sued in federal court, seeking to overturn a decision by the Federal Energy Regulatory Commission (FERC) to approve Williams’ Transco Garden State Expansion pipeline project. MDN brought you the happy news in April 2016 that three Obama-appointed FERC commissioners had approved the $116 million project (see FERC Approves NJ Pipeline – More Marcellus Gas on the Way!). The project was created to address supply disruptions following Superstorm Sandy in 2012. By upgrading compressor stations and adding a new meter station, the Garden State Expansion project will supply an extra 180 million cubic feet per day (MMcf/d) of natural gas to “a new delivery point on Transco’s existing Trenton Woodbury Lateral pipeline” (see NGI’s Shale Daily). Two towns in Burlington County (Bordentown and Chesterfield) where some of the work would be done for Phase 2 of the project filed a lawsuit asking the U.S. Court of Appeals for the Third Circuit to overturn FERC’s previous decision to allow the project. FERC has just responded (copy below) arguing they carefully considered the project, crossing all “T”s and dotting all “I”s before they authorized the project. Phase 1 of the project will likely go online next week. Phase 2 is due to be online by next summer, provided the 3rd Circuit doesn’t screw it up…
    Read More “FERC Fights NJ Town Effort to Decertify Garden State Expansion”